Correlation Between Global Real and Lifestyle
Can any of the company-specific risk be diversified away by investing in both Global Real and Lifestyle at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Global Real and Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Real Estate and Lifestyle Ii Moderate, you can compare the effects of market volatilities on Global Real and Lifestyle and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Global Real with a short position of Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Real and Lifestyle.
Diversification Opportunities for Global Real and Lifestyle
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and Lifestyle is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Global Real Estate and Lifestyle Ii Moderate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestyle Ii Moderate and Global Real is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Global Real Estate are associated (or correlated) with Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestyle Ii Moderate has no effect on the direction of Global Real i.e., Global Real and Lifestyle go up and down completely randomly.
Pair Corralation between Global Real and Lifestyle
Assuming the 90 days horizon Global Real Estate is expected to generate 2.23 times more return on investment than Lifestyle. However, Global Real is 2.23 times more volatile than Lifestyle Ii Moderate. It trades about 0.04 of its potential returns per unit of risk. Lifestyle Ii Moderate is currently generating about 0.08 per unit of risk. If you would invest 847.00 in Global Real Estate on August 28, 2024 and sell it today you would earn a total of 147.00 from holding Global Real Estate or generate 17.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Real Estate vs. Lifestyle Ii Moderate
Performance |
| Timeline |
| Global Real Estate |
| Lifestyle Ii Moderate |
Global Real and Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Real and Lifestyle
The main advantage of trading using opposite Global Real and Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Real position performs unexpectedly, Lifestyle can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lifestyle will offset losses from the drop in Lifestyle's long position.| Global Real vs. Real Estate Securities | Global Real vs. International Emerging Markets | Global Real vs. Midcap Fund Class | Global Real vs. Global Diversified Income |
| Lifestyle vs. Regional Bank Fund | Lifestyle vs. Regional Bank Fund | Lifestyle vs. Multimanager Lifestyle Balanced | Lifestyle vs. Multimanager Lifestyle Aggressive |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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